Market sinks toward support as time erodes

Market Snapshot for session ending 9-21-11:

 

Last

Day Change

%Change

S&P 500 Index

1166.76

-35.33

-2.94%

Dow Jones Industrials Average

11124.84

-283.82

-2.49%

NASDAQ Composite Index

2538.19

-52.05

-2.01%

Value Line Arithmetic Index

2469.90

-88.96

-3.48%

Minor Cycle
(Short-term trend lasting days to a few weeks)
Positive / Neutral

Intermediate Cycle
(Medium trend lasting weeks to several months)
Negative / Neutral

Major Cycle
(Long-term trend lasting several months to years)
Neutral / Negative

Market Overview – What We Know:

  • Losses Wednesday pushed S&P 500 and S&P Emini prices lower and into vicinity of lower edge of 10-Day Price Channels at 1163.76 and 1151.57, respectively.
  • At same time rising uptrend lines in effect since August lows were last plotted at 1147--S&P 500 and 1135--S&P Emini.
  • Wednesday’s trading volume in S&P 500 rose by nearly 25%.
  • Next level of S&P 500 minor resistance holds at August 31 intraday high (1230.71--S&P 500).
  • S&P short-term Momentum remains slightly negative while our two proprietary Trading Oscillators remain positive, but fading.
  • Cumulative Volume in Cash S&P and S&P Emini is poised to break uptrend lines in both issues.
  • Rally in effect since August lows continues to have appearance of reflex rally in larger Intermediate Cycle negative.
  • Minor resistance holds at August 31 intraday high (1230.71—S&P) with Major resistance holding at 1255-1270—S&P 500).
  • CPFL was net negative Wednesday by 3.40 to 1.
  • Daily MAAD was negative Wednesday with 1 advance and 19 declines.

Market Overview – What We Think:

  • Time is simply running out on short-term advance that has been underway for past six weeks and since August price lows in major indexes.
  • While we cannot rule out possibility of further gains so long as short-term uptrends remain intact, the odds of such and occurrence developing are growing slimmer by the day. In fact, it would not take much selling from current levels to create new indicator and price lows.
  • Any weakness in S&P below lower edge of defined and rising short-term trend line last plotted at 1147 (Thursday) would likely suggest an end to reflex rally in effect since early August lows.
  • We continue to think price action since August lows is consistent with bear move reflex rally on Minor Cycle.
  • Even if more strength developed, it is highly unlikely major resistance at “Neckline” level of S&P 500 (1255-1270) will be seriously challenged before short-term trend reverses to negative.
  • If more weakness develops in earnest, its likely Momentum on long-term trend will turn negative to confirm a reversal of larger bull move in effect since March 2009.

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